There is some confusion in the health world about what the concept of value-based purchasing is. Early efforts to utilize evidence based medicine as a way of creating better health care were often referred to as Pay for Performance programs or “P4P”. Recently, these types of programs have been referred to as value-based purchasing programs—most notably by CMS. While there are some references to P4P in the literature, the more common name of this movement is now value-based purchasing. A definition advanced by AHRQ is helpful, but keep in mind that this is a process in development and there will be many changes to the concept before we are through.
"The concept of value-based health care purchasing is that buyers should hold providers of health care accountable for both cost and quality of care. Value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers. This strategy can be contrasted with more limited efforts to negotiate price discounts, which reduce costs but do little to ensure that quality of care is improved."
Meyer J, Rybowski L, Eichler R. Theory and Reality of Value-Based Purchasing: Lessons from the Pioneers. Rockville, MD: Agency for Health Care Policy and Research; 1997. AHCPR Publication No. 98-0004.
